RUTH SUNDERLAND: The hidden members of the high pay elite

Chief executives love to point out that they are not the only offenders when it comes to well-padded pay packets.

They claim to be practically paupers in comparison with top accountants, lawyers, private equity barons and hedge fund princelings, who are able to rake in their millions discreetly.

The subtext is we should pity the poor old plc bosses who must suffer the indignity of revealing their rewards in the annual report, and subject their pay to a shareholder vote. It’s a luxury problem – and the notion that corporate executives should be absolved of criticism because others are just as greedy is, of course, entirely spurious. The answer to the anomaly is not less scrutiny of CEOs but far greater transparency from the hidden high pay brigade.

Hidden culture: Far greater transparency is needed for the enthusiastic subscribers to the high pay culture

Take private equity. Despite the name, there is a strong public interest in the vast personal riches the top players can amass.

Private equity deals, which have involved some national institutions such as the AA and Boots, are in part backed by ordinary savers’ cash that is channelled into the sector through pension funds.

And partners’ wealth – itself lightly taxed – is generated at least in part courtesy of the taxpayer, as the industry benefits from tax breaks on debt interest.

As for the senior partners at the UK’s top law and accountancy firms, the High Pay Centre this week shed some light.

Published information is patchy, but the HPC’s research suggests around 1,400 leading lawyers and accountants earn at least £1million a year. Recent reports suggest law firm Freshfields Bruckhaus Deringer has the best-rewarded top staff, with an average £1.48million profit per equity partner last year.

These figures are not quite in the FTSE 100 chief executive league, but they are not bad either.

Three of the top four accountancy firms, PwC, Deloitte and KPMG do give details of their senior partner pay: £3.6million, £2.7million and £2.4million respectively. The rest is silence.

This is unsatisfactory. Law and accountancy firms are deeply enmeshed in the corporate world, playing multifarious and sometimes seemingly conflicting roles.

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One lucrative sideline for the accountancy firms, for instance, is remuneration consultancy – giving advice to the pay committees on FTSE boards.

Yet, as enthusiastic subscribers to the high pay culture themselves, they are hardly likely to act as a brake on corporate excess.

In the wake of the financial crisis, there was an outcry over why none of the large audit firms had sounded a klaxon warning of impending disaster at the banks. Large fees, translating into lucrative rewards for partners, might just give a clue.

The referral by Vince Cable to accountancy watchdogs of the administrators from Deloitte into the electrical goods chain Comet, is another case of potential conflict of interest – and it landed taxpayers with a bill of up to £44million.

The law firms have had a bonanza in the current climate, as the string of scandals from dark pools to Libor is great business for them.

The clampdown by regulators following the crisis has created a spike in demand from banks seeking to comply with, or dare one suggest circumvent, new rules.

Another good source of business for the lawyers is conducting inquiries – whose conclusions are sometimes kept confidential – on behalf of regulators. Then there are the supposedly independent investigations such as the one by Clifford Chance into RBS’s treatment of business customers in financial difficulty.

The public has a clear interest in the outcome of these probes. The legal and accounting professions should play a key role in ensuring that the UK has a cleanly-run corporate sector that is not just a racket run for the benefit of executives. That is incompatible with a climate of secrecy over rewards at the top of the leading firms.

Old but good

Age cannot wither Sir David McMurtry, the 73-year-old boss of engineer Renishaw or the 75-year-old deputy chairman, John Deer.

Their company, which they began building in 1973, shot to the top of the stock exchange leader board this week when it reported record revenues and a 17 per cent rise in annual profits – despite the strength of the pound.

Not only that, but Renishaw won its 17th Queen’s Award for Industry, hired more than 250 staff, including 59 graduates, and invested £40million in property, plant and machinery for future growth.The vast bulk of sales are exports, and the company is endlessly inventive, having recently come up with the world’s first 3D printed metal bicycle frame.

As Governor Carney pointed out, the UK has shown some success in the sprint, as the fastest growing advanced economy in the world. If we are going to perform in the marathon, we need more companies like Renishaw.